If you've been thinking of selling your home, this would appear to be the right time to do it. But how do you know if you are truly ready to sell? What financial and emotional steps do you need to take to get yourself and your home ready for buyers?
Fortunately, determining if you're ready to sell isn't overly complicated. In fact, there are clear signs that you are ready to pound those "For Sale" signs into your front lawn.
1. You have equity
The most important sign is that you have enough equity in your home. With sufficient equity, the odds are better that you'll leave the closing table with profits in your pocket.
Equity is the difference between what you owe on your mortgage and what your home is worth. The more equity you have, the better. If you owe $150,000 on your loan and your home is worth $250,000, you have $100,000 equity in your home.
Determining your equity can take a bit of work. First, look at your most recent mortgage statement to see how much you owe. Next, figure out how much your home is worth today. Don't rely solely on sites such as Zillow — their estimates are often inflated. Instead, give us a call and we'll perform a market analysis.
You can also hire a professional appraiser to appraise your home. This isn't free, though: You can expect to spend about $300 to $400.
Whatever approach you take, you should get some idea of what your home is worth in today's market. If you have a significant amount of equity — enough to cover a down payment and closing costs on whatever new home you plan to buy — now might be a good time to list your property.
2. You have savings
Selling a house isn't cheap. If you want your home to look its best, you might have to hire a stager to clear out rooms and rearrange furniture.
There's also the cost of applying for a new mortgage and buying a new home after selling your current residence. You'll need to pay for movers, come up with a down payment for your new home, and pay for home inspections and an appraisal. It all adds up.
And, yes, you might be counting on the profits from your home sale to pay for most of the expenses of moving to a new house. But some bills you might have to pay before you receive your check from your home sale. So, make sure you've built up enough savings to handle the many expenses that pop up when selling.
3. Your credit scores are strong
After you sell, you'll need a solid credit history to qualify for a mortgage for your next home. A strong score also nets you lower interest rates and a lower monthly payment.
Before you list your home, order a copy of your credit report. Study the report for errors. If a report lists that you missed a car payment that you know you paid on time, contact the offending credit bureau to fix the error. Fixing mistakes can cause an immediate bump in your score.
Lenders consider scores of 720 or higher to be particularly strong. If you have such a score, you won't struggle to qualify for a loan and you'll usually qualify for lower rates. If your credit score is low, you need to improve it before you think about selling.
4. Your home is shrinking
Are you growing your family? Are you running out of space for bedrooms? Does it feel like you're living in a clown car? It might be time to sell. One of the main reasons that owners sell is that they simply outgrow their current living space. If your house no longer fits the need — or size — of your family, it might be a good time to put it on the market.
5. You're ready to break those emotional ties
Selling a home is different from living in one. Your real estate agent might recommend that you remove most of your family photos. A stager might suggest that you put a favorite sofa in storage. You might get negative feedback from buyers on the paint in the kitchen and have to make changes.
Can you handle this? Can you take criticism of your home and your style choices and make the changes necessary to sell your home quickly?
If not, you might need to wait before selling. When you've lived a part of — or all of — your life in a certain residence, it's normal to have emotional attachments you aren't ready to part with. But if you are ready to cut those emotional ties to your home, you're ready to make the transition from living in a home to selling it.